Could you bring us up to date with the latest developments at the Chamber, including the disbursement from the Tertiary Education Fund for UMaT?
In the last year, the Ghana Chamber of Mines has been focused on working closely with the Ministry of Lands and Natural Resources as well as other regulatory agencies to consolidate the country’s position as the preeminent destination for mining capital in the sub-region. The key feats we wish to highlight in this interview are the Chamber’s efforts in promoting local content and female participation in the mining sector.
With respect to local content, the Chamber worked with the Ghana Standards Authority to establish standards for electric cables, supported some prospective investors with data on inputs demanded by its member companies and facilitated meeting opportunities with the mining firms and finance houses. Indeed, the Chamber commenced discussions with the umbrella organization of commercial banks in Ghana, Ghana Association of Bankers, to design a tailored financing scheme for firms embedded in the value chain of the mining industry. In the period, the main inputs that the Chamber focused on were caustic soda, activated carbon and sodium cyanide. The Chamber’s preoccupation with these items was based on the availability of raw materials as well as significant demand outside the mining industry.
On female participation in the mining sector, the producing member companies of the Chamber have set ambitious targets to increase the female-to-male ratio at their respective mines. For example, the managers of a new large-scale gold project intend to achieve parity in terms of the number of male and female employees. To realize such objectives, the Chamber has been engaging the local chapter of Women in Mining (WIM) to identify and resolve the issues that hinder female participation in mining. More so, the board of the Chamber admitted WIM to the membership of the Chamber to strengthen collaboration between both parties.
As you well know, the Ghana Chamber of Mines’ Tertiary Education Fund (TEF) was launched in 2019 with a five-year endowment of over US$2 million. In the initial funding window, the accrued funds were earmarked for projects at the University of Mines and Technology, which is the foremost tertiary institution for training mining professionals in the country and sub-region.
The Ghanaian mining industry suffered a 12% YoY reduction. Can you comment on the industry’s performance in the last year and share your projections for 2021-2022?
The decline in gold production in 2020 was primarily attributable to developments in the small-scale sector. The introduction of an export tax on gold produced by small-scale miners induced a sharp contraction in the quantum of gold exported by small-scale miners, from 1.59 million ounces in 2019 to 1.18 million ounces in 2020. In the large-scale sector, production also dipped by 4.8%, from 2.99 million in 2019 to 2.85 million ounces in 2020. The downturn in production was on account of a variety of mine-specific issues.
In the 2021-2022 period, the Chamber expects gold production to range between 3.1 million ounces and 3.2 million ounces, which would be a further decline over the recorded in 2020. These projections are explained primarily by the downturn in official production attributable to small-scale miners. Specifically, we expect gold production (exports) by the small-scale sector to be less than 100,000 ounces by the end of 2021, a marked reduction relative to its 2020 outturn of over 1 million ounces. Regarding the large-scale sector, we estimate that gold production will approach over 3 million ounces at the end of 2021. In the 2022 budget statement and economic policy of the government, the export tax applicable in the small-scale sector was halved, from 3% to 1.5%. If the small-scale miners respond positively to this tax cut, we will expect the country’s gold output to increase to about 4 million ounces in 2022.
What are the existing incentives to boost exploration in the country?
Perhaps, the main attraction for gold exploration in Ghana is its famed geology and stable political climate. The Chamber has been urging the government to complement these prized factors with a favourable fiscal regime for the exploration sector. Specifically, the Chamber has requested the government to exempt exploration firms from the payment of VAT on services consumed in the course of mineral exploration as well as review the regulatory land holding costs downwards.
While the traditional focus on investments has been the gold sector, the country has enormous potential for producing development minerals, manufacturing of mining inputs and provision of mining support services.